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Down So Long, Looks Like Up

New Home Salesby MFR 675 Third Ave. New York, N.Y. 10017 Nov. 27: While recent results, as shown in the S&P Case-Shiller index for September, have been considerably better than those seen earlier, we continue to believe that the enormous supply overhang of existing homes (factoring in all of those in foreclosure or soon to be) promises to keep pressure on prices for some time. Also, with foreclosures now starting to ramp back up, increased sales of distressed properties are likely to have a downward influence on price data, just as a reduced number of such sales in recent months likely had a beneficial effect. This, combined with seasonal weakness inherent in this slow selling season, promises to make home-price data considerably less buoyant before too long, and all the cheerleaders now jumping on the housing-recovery bandwagon are likely to be disappointed yet again. -- Joshua Shapiro

Mixed Signals

U.S. Daily Economic Notesby Deutsche Bank 60 Wall St. New York, N.Y. 10005 Nov. 27: Consumer confidence has been in a grinding uptrend for some time. Quarterly figures show that it bottomed at 31 in first-quarter 2009 and has steadily risen since then, up to 67.3 in third-quarter 2012. Preliminary October data hint of a 70-plus reading in the fourth quarter. While this is still historically low, the trend is encouraging, as it corroborates the strength in retail sales.

This isn't the case for businesses. CEO business confidence fell sharply last quarter, down 8.4 points to 70.2, after a 27-point drop in the second quarter. The fact that the trends in consumer and business confidence are divergent indicates that households are much less worried about the fiscal cliff than are businesses. This suggests that consumers could be in for a rude awakening. -- Joseph A. LaVorgna

The Need to Talk Turkey

U.S. Economic Commentby UBS 1285 Sixth Ave. New York, N.Y. 10019 Nov. 28: We forecast a 50k rise in payrolls in October and the unemployment rate up 0.1 percentage point to 8%. The weak forecast reflects both a huge drag from Hurricane Sandy (an estimated -150k) and a large upward bias to payrolls from this year's early Thanksgiving, and thus earlier retail hiring (an estimated +75k). Labor is likely to issue an estimate of Sandy's negative effect on employment, but the impact of the early Thanksgiving on payrolls is unlikely to be fully appreciated. -- Maury N. Harris

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